Accountants Professional Liability

One of the more important decisions you make as an accountant pertains to your professional liability insurance. No matter how talented you are, you’re human and capable of making a mistake. When that happens, you’ll want to make sure you have adequate insurance coverage.

Every successful accounting practice needs professional liability insurance to protect the assets of the business and the personal assets and careers of those who practice there. Understanding the components of your policy and what to look for will help ensure you are adequately covered. One area that is important to understand is prior acts coverage and the retroactive date.

Not every client who walks through your door will be one with which you want to do business. Just because somebody is willing to pay for your services doesn’t mean it’s in your best interest to take on their work.

In fact, your decision to decline a client may save you money (and a lot of trouble) down the line. From the high maintenance client to the truly malicious one, some people are just not worth the added stress and risk of an accounting malpractice claim.

It’s great to have professional liability insurance that covers your day-to-day work, and if you’re settled at a firm that provides coverage, you may feel like you’re safe and protected.

There are two ways to get coverage for claims that arise outside your policy period: tail coverage and retroactive (or prior acts) coverage.
It’s important to ensure you have the right combination of these types of coverage anytime you make a change in your accounting professional liability insurance so you have the protection you need.

When you file a claim with your malpractice insurance company, it is standard practice for your insurer to send a “reservation of rights” letter to protect its right to deny coverage if your claim isn’t covered by your policy. It’s understandable that this can sometimes cause a bit of panic. It’s important to understand, however, that receiving this letter does not mean that your insurer is denying coverage.

If you’re opening a new practice, just getting around to buying professional liability insurance, or shopping for a better policy, asking the right questions is critical to getting the best protection and value. Before you sign up, be sure to know the answers to these questions.